Grey Economy On The Way Out In Croatia

Basic everyday household items bread and milk are about to become more expensive in Croatia. Bread, milk, books, medication, orthopedic aids and cinema tickets previously had a 0% VAT rate, but from 1 January 2013, the VAT on those products has moved from 0% to 5%.

There was some good news however, the VAT rate for goods and services such as coffee, non-alcoholic drinks, beer and wine in restaurants and cafes, has been reduced to 10% from 25%. Time will tell if restauranteurs pass on those savings to their customers.

The first day of 2013 also signalled the start of the end of the grey economy in Croatia as a new fiscalization law came into effect. The new law was proposed in order to avoid tax evasion for subjects who charge cash for their receipts, such as retail locations, restaurants, and bars. Cash registers, linking up to the tax department, now are mandatory for traders.